Treasury Secretary Yellen’s Annual Testimony on International Financial System (VIDEO)

The Annual Testimony of the Secretary of the Treasury on the State of the International Financial System

Time: Wednesday, April 6, 10am ET

House Financial Services Committee Memorandum here:

“The International Financial Institutions Act (22 U.S.C. §262r-4) requires the Secretary of Treasury to present testimony annually before the House Financial Services Committee on the state of the international financial system and U.S. priorities with respect to U.S. participation in the international financial institutions. The Secretary of the Treasury will also discuss other issues related to U.S. global economic cooperation and major international developments affecting the U.S., including Treasury’s role in implementing and enforcing sanctions against Russia.”

Live blog on excerpted blockchain-related topics discussed: Continue reading “Treasury Secretary Yellen’s Annual Testimony on International Financial System (VIDEO)”

Tesla Taps DeFi Deal to Seed Construction of Collision Repair Shops

Last week, MakerDAO quietly divulged that Tesla will use MakerDAO’s debt financing capabilities in coordination with 6s Capital in order to build out a collision repair shop strategy.

The Defiant reported, “On March 30, 6s Capital, a commercial lender powered by MakerDAO, closed a real estate financing deal worth $7.8M for Tesla…”

As MakerDAO’s Nik Kunkel told Bankless podcast‘s David Hoffman, the potential long term benefit to Tesla and its stock price is the ability to roll out a wider strategy for collision repair that does not create capital expense but rather, operational expense, given the beneficial way MakerDAO’s loan system works.

On the details, Kunkel said (lightly edited for clarity):

“What’s happening here is that Tesla wants to build a network of collision repair centers, I believe right now in the US, but I think eventually it’s supposed to be a global thing. But they don’t have the capital to build all of these things themselves. And if you think about them doing a capital raise, debt on your balance sheet isn’t the best thing when when you start like analyzing the health company – it would really slow down their ability to execute on this right, [if] it shows up as a capital expenditure.

So what they’re doing is they’re using credit tenant leases, in order to raise the cash to build these. So what a credit tenant lease is, it’s essentially saying that if someone (i.e. 6s Capital) were to finance the construction of this, then Tesla will promise to pay a certain amount of rent. Every year for X number of years, and maybe the amount increases by Y percent per year.”

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New Stablecoin Transparency Act Supports Innovation and Protections Say Lawmakers

D.C. blockchain policy discussion around stablecoins is heating up. Last week, two Republican legislators sought transparency, and investor and innovation protections in one fell swoop.

Senator Bill Hagerty (R., Tennessee) introduced a new bill called the Stablecoin Transparency Act (S.3970) in the U.S. Senate. According to the legislation, the intention is to “establish reporting requirements for issuers of fiat currency-backed stablecoins, and for other purposes.” Next stop will be the Senate Committee on Banking, Housing, and Urban Affairs.

Simultaneously in the U.S. House of Representatives, Congressman Trey Hollingsworth (R., IN) introduced “H.R.7328 – To establish reporting requirements for issuers of fiat currency-backed stablecoins, and for other purposes.” The bill has been referred to the House Financial Services for review.

In a release from Sen. Hagerty’s office and in concert with Rep. Hollingsworth, though transparency through regulation is clearly one purpose of the bill, a pro-crypto tone poked through, “This legislation aims to provide much-needed clarity without giving the keys away to unaccountable bureaucrats who threaten to choke off innovation.”

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New Director of Digital Currency Security Proposed for State Department

McCaul and Meeks

As part the new “Russia Cryptocurrency Transparency Act” proposed by Rep. Gregory W. Meeks (D., NY) and Rep. Michael McCaul (R., TX), Chair and Ranking Member of the House Foreign Affairs Committee, a new role for the U.S. Department of State is being proposed by Congress in order to overcome any subversion of sanctions in the cryptocurrency markets by Russia due to its invasion of Ukraine.

The press release takes care to not condemn crypto at the outset and then pinpoints the heart of the matter:

“While the rise of digital assets like cryptocurrencies promise innovative financial opportunity, digital assets could be ripe for abuse as Russia seeks to evade the unprecedented sanctions the United States has imposed for Vladmir Putin’s brutal war of choice on Ukraine. This legislation will provide greater oversight over the State Department’s rewards program, helping ensure these hard-to-trace funds are not falling in the hands of bad actors.”

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Crypto Lending and Complaints of The SEC Curtailing Innovation

The recent $100 million settlement by BlockFi with the Securities and Exchange Commission (SEC) in mid-February – see press release and SEC order (PDF) – was hailed by some as welcome guidance by the SEC on cryptocurrency and a step forward for the blockchain industry.

In particular, the SEC required the registration of BlockFi’s crypto lending products as a security going forward – an expensive process that could overwhelm less well-capitalized decentralized finance (DeFi) companies.

BlockFi itself declared at the time, “We have worked tirelessly with regulators on your behalf to chart this exciting path forward, and we look forward to our next chapter of pioneering innovative, crypto-powered products for our clients worldwide.” And then, the company announced an SEC-compliant product, BlockFi Yield which replaced the previous BlockFi Interest Accounts which were offered in the U.S.

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Senators Lummis and Gillibrand Unveil New Digital Assets Legislation Partnership

Senator Kirsten Gillebrand (D., NY) and Senator Cynthia Lummis (R., WY)

Last Thursday, a live event burst into D.C.’s emerging post-covid reality as Politico produced,  “Regulating the Digital Gold Rush” sponsored by Grayscale at the Hotel Washington.

The one-hour event in front of 150-200 attendees did not disappoint and was highlighted by a new congressional crypto partnership between Senator Cynthia Lummis (R., Wyoming) and Senator Kirsten Gillebrand (D., New York). The senators presented hints on their coming digital assets legislation in a conversation with Politico reporters Sam Sutton and Ben Schreckinger.

Will this be the seminal bill desired by pro-crypto legislators and the blockchain industry? After President Joseph Biden’s crypto Executive Order two weeks ago, momentum is clearly building.

Notably contrasting the partisan rancor typical in the Capital city, the senators appeared synchronized – albeit with the sense that Sen. Gillibrand is still getting up to speed – across a wide-range of far-reaching digital asset talking points. Potential crypto-friendly regulation connected to the complexities of mining, effective use of energy in the crypto world as well as the de minimis $600 tax rule were singled out in addition to maintaining the United States leadership role in innovation.

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Tokenization, Synthetics and the Stock Market Explored at SXSW

Cake DeFi

Are Synthetics a Fad or Breakthrough for Finance?” at SXSW, Cake Defi Founder and CEO Julian Hosp did his best to bring clarity to many of the late-breaking developments in tokenization models across decentralized finance (DeFi) for an eager SXSW audience.

Were some in the audience from the SEC? Hard to say – but given the questions during the Q&A, lawyers were most assuredly in attendance.  Today, the decentralized finance services of Singapore-based Cake Defi (offering staking, liquidity mining and lending) are available everywhere but the U.S., according to Hosp. Yet, he believes the positive implications of decentralized finance go far beyond today’s stock investors and includes the possibility of reaching a global population with limited access to funds and technology.

One other important underlying theme running throughout the hour-long presentation: decentralized finance is about creating tokens that are not a security with its incumbent regulatory framework. This is the hill that DeFi is trying to climb. Given Cake Defi’s recent announcement of its very own venture arm with $100 million of capital, the race is on to grow the space.

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Financial Surveillance and a Crypto Society Meet at SXSW

Filecoin at SXSW

Blockchain technology and cryptocurrency were on full display at the recent SXSW festival in Austin, Texas. For the Filecoin Foundation-sponsored track last Tuesday, privacy was a key topic and included a panel discussion titled, “Financial Surveillance in a Cashless Society.”

AML (Anti-Money Laundering) and KYC (Know Your Customer) requirements are ever-growing in the cryptocurrency space especially as the new distributed ledger technology and traditional finance worlds continue to merge. So, where does privacy fit in? A standing-room only audience wanted to know.

Marta Belcher, general counsel of Protocol Labs and chair of Filecoin Foundation, offered some initial thoughts in a crypto context: “There is this myth that privacy is bad and that tools that enable privacy and anonymity are illegal or enable illegal activity. And I think that is fundamentally a very important misunderstanding. Privacy is absolutely critical to civil liberties, as is the ability to transact anonymously.” She pointed to the importance of anonymity as it related to participants in the the Hong Kong protests of 2019-2020 and their anonymous purchase of subway tickets to get to the gatherings.

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